What those figures mean is that on the reporting period in question (which I believe was about 8/15/99), there were 3.434 million shares sold short. This was 28.818% of the number of shares outstanding (about 11.89 million shares). This was also about 32.093% of the "float", which apparently your service thinks is about 10.7 million shares. That is the number of shares held by non-insiders, and presumably available for sale. (but insiders sell too, some of them a lot more often than I do,so I maintain that the "float" figures for THQ and most stocks is useless information.) The "Days - 10.665" is the number of "days to cover." This is just the total short interest divided by the average daily volume. It is the number of days it would take the shorts to "cover" (i.e. buy back their shares previously sold short), if they traded a number of shares each day equal to the average daily volume.
One thing to keep in mind is the short interest is not limited by the shares outstanding, or the float. If THQ has 11.9 million shares outstanding, and 3.4 million shares sold short, this means that there are 15.3 million (11.9 + 3.4) shares held by longs, and 3.4 million shares sold short. To sell 3.4 million shares short, you have to borrow 3.4 million shares from people holding them long, and then turn around and find 3.4 million other people to buy these shares from you when you sell them short. So short interest increases the float, by my way of thinking. There are 15.3 million shares held long of THQ. At $34 per share, that is $520 million. That is the amount of money bet long on THQ. Vs. 3.4 million shares sold short, which amounts to a $115 million bet against us longs. Right now, the longs are winning, as the average THQ long is money ahead, and the average THQ short is money behind.
How can you use this information to your advantage? It is probably not too useful information. From the short interest figures, and other information we have learned, it appears to me that there is probably one (or possibly more) hedge fund(s) that has decided to short THQ on the belief that their revenue and income will drop precipitously in the next few quarters, when THQ no longer has revenue from the WCW game. THQ CEO B. Farrell has said this won't happen, and I am betting he knows what he is talking about. So I am long. Time will tell who is correct. If we are, then the shorts might cover. If and when they do, this will cause 3.4 million shares buying pressure in the stock. This will cause the stock price to go higher than it otherwise would. All THQ longs are of course hoping this will happen soon. |
